Lululemon’s founder quits the yoga gear maker’s board

Lululemon Athletica founder Chip Wilson said Monday he will step down from the retailer’s board of directors, a move that ends an at times difficult relationship between the yoga apparel maker and its former chief executive.

Wilson, who founded Lululemon LULU in 1998 in Vancouver, said he had achieved the goals he had set since he came back to the retailer in 2013 — to help it mitigate an issue it had with yoga pants that were too sheer.

“After careful thought, I believe that now is the right time to step away from the board,” Wilson said in a statement. He intends to focus more on his work with a new business called Kit & Ace, a luxury brand founded by Wilson’s wife and son.

Wilson, who served as Lululemon CEO from 1998 to 2005, built the brand to meet the needs of women as they were increasingly participating in sports, specifically yoga. Retail expansion soon followed, and Lululemon, known initially as a yoga company, has since expanded its product slate to also focus on items meant for running and biking, as well as move to sell more gear to men.

But the company and its founder have both faced challenges. Lululemon in 2013 was forced to pull some of its popular pants after a mistake by a supplier left the pants somewhat see-through. That issue led to the ouster of former Chief Executive Christine Day, as well as the return of Wilson. Some analysts contend that the brand has still not fully recovered from that debacle. Lululemon is also seeing greater competition in the yoga category, as Gap GPS and others tackle the market.

Wilson himself was at times a controversial figure. He had generated some negative press when he said that the company’s pants weren’t meant to work for all body types. That comment was broadly derided as insensitive and out of touch.

Last year, Wilson called for a shakeup of the company’s board, saying it had focused too much on short-term results. He later reached a deal to refrain from waging or supporting a hostile takeover of the business until 2016. Under the terms of that deal, Wilson also sold half of his 27.7% stake.

“Trying to affect a fundamental shift in direction is hard and I had to raise a strong voice to make myself heard while taking decisive action to implement change,” Wilson said on Monday. “I am happy to say that I now believe the company has returned to the core values that made it great — product, brand and culture — and is back on track.”

Athletic apparel: Outperforming the competition in 2014

Growing demand for activewear, the sporty fashion for both the gym and the streets, has lifted sales for makers of the clothing and the retailers that sell it.

Athletic gear, you might say, is running laps around the competition – doing even better than the overall retail industry, which is humming along as shoppers feel more comfortable about opening their wallets because of the improving economy.

“Activewear is booming, with sales growth exceeding that of the apparel market as a whole,” said NPD analyst Marshal Cohen. “Consumers are drawn to its comfort and versatility, and the fact that it still makes a fashion statement.”

The proof is in the industry’s sales results. Nike’s NKE North America sales leapt 14% for the six-month period ending November 30 from the prior year’s level with the help stronger footwear and apparel sales. Smaller rival Under Armour’s UA sales in the region leapt 29% for the first nine months of 2014. Sales are also climbing at major companies including Lululemon Athletica LULU and Foot Locker FL.

What’s driving this trend? Well, for one thing, activewear is suddenly chic. Nike earlier this year showcased its new gear on top supermodels like Karlie Kloss, while Gisele Bundchen has appeared in Under Armour ads. Their willingness to sign on as ambassadors highlights just how fashionable athletic gear has become.

Americans are taking notes. They are wearing yoga pants, running gear and basketball shoes not just to-and-from the gym, but also around town. Athletic gear is comfortable after all, and analysts say the attention manufacturers are making to fabrics and new colors and styles have helped to broaden the category’s appeal.

And there’s a lot of opportunity for these athletic apparel makers to grow even more. Lululemon, for example, wants to expand beyond its female yoga-loving roots to reach more men. In the next few years, the company hopes its men’s business will grow to $1 billion in annual sales.

Meanwhile, Nike and Under Armour, whose customers are mostly men, want to do a better job of tackling the women’s market. Nike is hoping sales of sports bras, tights and other women’s gear can add $2 billion to annual sales by 2017. Under Armour has said its $500-million women’s business can one day be as big if not bigger than its men’s business. Today, sales of the company’s men’s line is more than double in size.

The industry’s opportunities aren’t just limited to achieving more balanced sales between the genders. There is international expansion. And for Under Armour, the running shoes industry is particularly alluring.

While athletic clothing sales are mostly taking off, the stock market is still picking winners and losers in the field. Shares of Nike, Under Armour and Foot Locker have each notched gains of 20% or more so far this year, far exceeding the broader market’s performance. Stock-market losers include Luluemon, Finish Line FINL, and Adidas .

All of the poorer performing companies are facing their own challenges. Lululemon ran afoul with yoga pants that were a little too see-through. Finish Line’s margins have been pressured by big discounts for its slow-selling basketball gear. And at Adidas, slumping sales of golf and a weak performance by its Reebok unit have hurt results in the United States.

Broadly speaking, running, basketball and yoga gear are selling exceptionally well. But other pockets like golf and hunting are slumping.

Despite those exceptions, the athletic-gear industry is still looking pretty solid overall. Business continue to improve, even for the weaker players. Finish Line’s sales rose 8.6% in the latest quarter, for example, while Lululemon’s gained 10% and Adidas global revenue grew 9%. Mass retailers are paying close attention and will likely stock their shelves with more athletic gear in 2015.

“Retailers and manufacturers across the board know that activewear is active, and they all want a piece of the action,” Cohen said.

Downward dog? Lululemon offers a disappointing holiday outlook

Lululemon Athletica’s third-quarter net income dropped nearly 9% as the athletic-gear maker reported weaker gross profit margins. Sales growth for the period wasn’t as strong as the company had projected. Here’s what else you need to know about the company’s earnings report.

What you need to know: Lululemon’s results were a mixed bag, with a few key red flags that should raise some concerns. For example, gross margin slid to 50.3% from 53.9% a year ago, coming after a similar year-over-year decline that was reported for the second quarter. That’s problematic for Lululemon LULU, which often commands lofty price points for its yoga and running gear.

Lululemon also trimmed its full-year sales target as it issued a fourth-quarter view that missed Wall Street’s expectations. That could be due to some tough competition during the critical holiday season, though Lululemon said some of the sales outlook was affected by West Coast port delays, a lower Canadian dollar and some delayed store openings.

The big number: Net revenue jumped 10% to $419.4 million for the latest quarter, though profit for the period slipped to 42 cents a share from 45 cents a year ago. The net income results were better than Lululemon had projected, while the sales growth wasn’t as strong as the company had hoped for. Total comparable sales, which include sales at stores and direct-to-consumer sales, rose 3% during the quarter ended November 2. Analysts had projected a 2.1% increase, according to a survey conducted by Consensus Metrix.

What you might have missed: While Lululemon has reported a double-digit increase in sales for all three quarters of this year, almost all of that growth came from new store openings, not from a stronger performance at existing locations. Athletic gear makers are broadly benefiting from increased spending on athletic apparel — gear that is used for trips to the gym, and also worn more casually as day-to-day attire. But Lululemon is also asking its customers to spend more for its items, and that premium-price strategy comes at a time when other retailers like H&M and Forever 21 have added more athletic-inspired apparel to their collections.

Ex-Lululemon CEO on why she left the company

Former Lululemon LULU CEO Christine Day talked openly for the first time about why she left the apparel retailer at Fortune Most Powerful Women Next Gen conference on Wednesday.

She said at the end of her time at the company, her vision didn’t match founder Chip Wilson’s. “You have to take control of your own life and say, ‘This isn’t working for me.’” She added that Wilson loved disruption and clash: “That wasn’t who I was and that wasn’t going to work for me.”

Day also said that the company’s see-through yoga pants fiasco never felt like the big failure of her career, noting that you have to be willing to “manage through bad times as well as good times.”

Fortune previously detailed Day’s departure from the Vancouver-based company, but her onstage comments at the conference were the first time she addressed her culture clash with Chip Wilson directly.

Day planned to take time off after leaving Lululemon but soon after joined Luvo, a healthy food company that’s trying to put nutrition back in frozen foods. “I met with the founder, and I was captured by the mission,” she said. She noted that about 73% of healthcare dollars are spent on food-caused disease, and she saw an opportunity or marketplace disruption.

Day has made a career of working for disruptive consumer-facing companies. She started at Starbucks SBUX when it was a $400,000 in revenue operation and left 20 years later when it was $8 billion. She said she loves to create the business model for new concepts at companies that are also purpose driven. “If you wait for the evidence, you’re not the first mover,” she said.

Day left Starbucks under less fraught backdrop than her departure for Lululemon. She had worked for the company for two decades and needed to know “what was Starbucks and what was me. I needed to know what I was capable of.”

Lululemon for men — not just for yogis

Is it too much of a stretch for Lululemon to think it can get more men to buy its gear? The athletic apparel retailer doesn’t think so.

Much of the media attention on Lululemon’s LULU effort to tap into the men’s business — which could potentially reach $1 billion in annual revenue in the next few years — has centered on the thesis that the apparel brand needs to rely on more men practicing yoga. With that premise in mind, observers are curious about how Lululemon intends to stock its first standalone store, which caters exclusively to men and will open in the SoHo district of New York City on Black Friday later this month.

The retailer says its male consumers aren’t just yogis. It sees a broader appeal for the brand among runners, cyclists, CrossFit enthusiasts and other athletes.

“The guest we are going after probably works out five to six days a week, and maybe does yoga one day a week,” Felix del Toro, senior vice president and general manager of Lululemon’s men’s business told Fortune. “He sees the benefit of yoga, not only for his life, but also for his athletic performance. But he’s not a yogi.”

When Lululemon was founded in the late 1990s, the company built its business by focusing on women interested in athletic apparel, with an emphasis on yoga. But the yoga focus has lessened in recent years, and Lululemon’s marketing signals interest in a number of other athletic pursuits, particularly running. Annual sales are expected to total nearly $1.8 billion for the current fiscal year, though men’s gear only accounts for about 13.5% of volume at each of the company’s stores.

Del Toro said Lululemon sees its target male consumer as an athlete in his mid 30s. And while Del Toro admits that many of the men who were first introduced to the Lululemon brand learned about it after an introduction from their girlfriends, or wives, he thinks the brand is now resonating to the point where men are making more trips to the store on their own.

“I would rather build a really meaningful following than gets guys to try the product and not come back,” said del Toro. “Whether it’s a tri club or a CrossFit gym, a spin studio or a running club, building a relationship with him, that’s how he will realize the brand is for his lifestyle, and that it supports his lifestyle inside as well as outside the gym.”

The company’s men’s store will be a 1,600 square foot space in SoHo, with an assortment that is close to triple what consumers would see at an average Lululemon store (although the gear will also be available online). The store will clearly be broken down into three segments: clothes meant for working out, items for cooling off, and casual attire. Lululemon has geared up for this launch by boosting its men’s team. The company hired del Toro about a year and a half ago.

Canaccord Genuity analyst Camilo Lyon had mostly positive things to say about Lululemon’s assortment for men. He likes the “fantastic materials,” which he says provide comfort, but also a little bit of style. However, Lyon said Lululemon can still improve its assortment.

“Their basics are really strong, but some of the items that have a fashion component are only so-so,” Lyon said.

It’s important for Lululemon, which generates far more sales from the women’s business, to expand its customer base by courting more men. Rivals Nike NKE and Under Armour UA are in the opposite predicament. Their brands resonate more with men, and both are chasing the women’s business. Lululemon is also sending more brand representatives to gyms and running clubs, rather than yoga studios, to get more men to consider their gear.

Athletic gear makers are broadly benefiting from increased spending on athletic apparel — gear that is used for trips to the gym, and also worn more casually as day-to-day attire. But Lululemon is also asking its customers to spend more for its items. A Lululemon half-zip pullover is $84 at its cheapest, far above the $65 Nike charges, and the $60 tag for Under Armour’s most affordable offering.

“Their products aren’t cheap, so that might present an initial challenge in converting that male consumer, who is accustomed to Under Armour and Nike,” Lyon said. “They can make that argument that the product is really great, but they have to make that connection an easy one for the consumer to understand.”

There are already a few new hits in Lululemon’s closet. A male board short, new to the lineup this summer, was a huge seller. Del Toro said men are also responding well to Lululemon’s fabrics. They pass the so-called “sniff” test, according to del Toro. Men are more willing than woman to wear the same gear more than once before washing, and Lululemon says its gear has fibers that help neutralize odor-causing bacteria.

And while the yoga studio appears to be less of a focus for Lululemon as it aims to court a more diverse group of men, observers say more men are practicing the sport, and thus much can be gained from the yogi crowd. Sky Meltzer, CEO of yoga brand Manduka, estimates that roughly 35% of yoga practitioners in the late 20s to early 30s crowd are men. Historically, he thinks men have only made up 20% of the yoga crowd.

Lululemon is striking a stronger pose with men

The high-priced yoga-maker is reporting strong sales for its menswear business, which isn’t as large as the women’s side but is growing quickly. Comparable sales of men’s gear increased 5% at Lululemon’s LULU stores in the latest quarter, following a 9% increase in the first quarter. That growth contrasts with single-digit declines in same-store sales for the total business in the first half of the year.

The retailer is so encouraged by the men’s business that it is opening its first male-focused standalone store this fall in the chic SoHo neighborhood in New York City.

But is Lululemon benefiting from more men striking a warrior pose? The jury is still out on that question. More Americans are practicing yoga (20.4 million in 2012, up from 15.8 million in 2008) but only 18% of them are men, according to a survey conducted on behalf of Yoga Journal. More timely data isn’t available, so it is hard to say if yoga is courting more male interest.

But it is an undeniable fact that athletic-gear purveyors are benefiting from stronger sales than the overall apparel category, driven partly by greater interest in athletic fashion. Lululemon also sells running gear, a category that appeals more evenly to men and women.

Lululemon hasn’t disclosed if running or yoga gear is appealing more toward men, or even if the sales growth is driven by a balanced performance. But running and yoga have some natural synergies. Runner’s World, for example, showcases an entire series of yoga videos on the magazine’s website to teach runners about yoga. And yoga is a popular cross-training activity for runners that train for marathons and other long-distance events.

Meanwhile, some of the men’s gear sales at Lululemon aren’t even by the men themselves. Morningstar analyst Bridget Weishaar said some female shoppers, the core customer base at Lululemon, are also picking up gear for their husbands. Men are also introduced to the brand when shopping with their wives. And once they are in the store, Lululemon’s designs could help tip the scale toward a sale.

“It is a premium brand, so if the design is masculine enough, I think that they have had and will continue to have traction with men,” Weishaar said.

When Chip Wilson founded Lululemon in the late 1990s, he initially wanted to build a company that would sell gear to women interested in athletic apparel, with focus on yoga. Success from that business model led to strong sales and copycats, as Gap GPS and others have entered the space after seeing how well Lululemon performed for many years.

The strong performance from the men’s line, as well as soaring sales for gear aimed at teens, has helped diversify Lululemon’s business and also gives the retailer more opportunities to expand sales without just relying on stretchy pants and yoga mats.

In the early years, Under Armour struggled in the women’s aisle, with management admitting the “shrink it and pink it” strategy—resizing a men’s style and adding some color—was a bust. But Under Armour appears to have learned some lessons along the way. Plank in July told analysts that he believed the women’s business could one day be as large, if not larger, than the men’s side. Under Armour this summer debuted a high-profile marketing campaign that focuses on several female athletes, including ballerina Misty Copeland. New ads also feature model Gisele Bündchen.

Lululemon Athletica — a downward dog no longer

Shares of the yoga-gear maker jumped in pre-market trading Thursday after the company reported stronger-than-expected second-quarter results in an early sign of a turnaround at the beleaguered company.

Known for selling high-priced yoga and running gear, Lululemon is angling to move forward from a debacle last year when it was forced to recall some of its popular pants due to excessive sheerness.

Results for the second quarter, which ended Aug. 3, were strong across the board. Net revenue increased 13% to $390.7 million and per-share earnings for the latest period were 33 cents, both exceeding the targets Lululemon LULU had outlined in July. The company also raised some of its financial targets for the year.

“While there is still much to be done, we are making meaningful progress on building a scalable foundation for our next phase of global growth,” said CEO Laurent Potdevin.

Part of the reason Lululemon has churned out such strong revenue growth is rising consumer interest in athletic apparel, even if the consumers are wearing gear without participating in the sport. Activewear sales leapt 9% in the U.S. last year, while the total apparel market only grew by 2% over the same period, NPD Group reported.

Lululemon’s strength mirrors what other major athletic-gear purveyors have reported. Under Armour’s UA overall apparel sales leapt 35% in the latest quarter, while Nike’s NKE North American apparel sales were recently up 9%.

The strong results are also the first since a spat with founder Chip Wilson that began in June appeared to subside, at least for now. Wilson, who had in June claimed management was too focused on short-term results, reached a temporary truce last month when he agreed to sell half of his stake in the company in a deal that prevents a proxy war until at least 2016.

Yoga pants and iPhone delays — five things to know today

It’s a busy Thursday in the business world. We’ve got earnings from your favorite yoga pants maker, and the Apple news just keeps rolling in. Plus, U.S. stocks look set for a lower open following President Barack Obama’s announcement last night that the U.S. will expand its military campaign to thwart Islamic State militants. Here’s what else you need to know today.

Good news for yoga lovers

Lululemon, a company that’s been in the headlines for the wrong reasons lately, posted a solid earnings report today. Net profit was down slightly from a year ago, but it was much better than analysts expected. Shares of the stock were up more than 12% in pre-market trading on the news.

iPhone faces delays in China

The New York Times is reporting that delivery of the iPhone 6 and iPhone 6+ will be delayed in China, much to the chagrin of mobile providers in the country. The cell phone companies had already started planned advertisements accounting for a Sept. 19 release date for the new gadgets. Apple didn’t tell the companies, or the press, the reason for the delay.

Pro-union side regains lead in Scottish polls

A few days after one poll showing a narrow lead for the Scottish Independence movement sent British leadership and the markets for the Pound Sterling into a panic, a new poll once again shows that those in favor of Scotland remaining in the UK have a 6-point lead. Following the release of the poll, the UK currency saw an upswing on the foreign exchange markets.

Microsoft is killing the Nokia brand

The website Geek on Gadgets is reporting that internal Microsoft documents say the company is planning to kill the Nokia brand for cell phones. “Lumia” will be the major branding now, along with Microsoft.

Senators ask Burger King to stay stateside

Five U.S. Senators, led by Majority Whip Dick Durbin (D-Ill.), have written a letter to Burger King’s CEO Daniel Schwartz asking him not to go through with the company’s planned tax-advantaged inversion deal. All of the Senators who signed the letter are Democrats, except for Bernie Sanders, the Vermont Independent who caucuses as a Democrat.

Apple’s big event is finally here — five things to watch for in the week ahead

It’s the second week in September and that means one thing – a huge Apple event. A number of new products are expected. The question is whether they’ll live up to all the hype. It’s also a big week for some big consumer brands like Barnes & Noble, Campbell Soup, and Lululemon, which will announce earnings. With that said, here’s what you need to know to prepare for the week ahead.

1. Once again, it’s all about Apple

The time has come for the unveiling of Apple’s new products on Tuesday including an expected iPhone 6 and an iWatch smartwatch. There’s been gallons of ink (real and digital) already spilled by the media speculating about what will be announced. Tune into Fortune for a live-blog of the event starting just before 1 pm EST). The wild card is Apple CEO Tim Cook will mention the latest wrinkle: The nude celebrity photo hackings into Apple’s iCloud service.

2. But don’t forget about TechCrunch

Amid all the attention on the Apple event, it’d be a mistake to forget about TechCrunch Disrupt in San Francisco running Monday through Wednesday. The annual conference features speakers including Theranos CEO Elizabeth Holmes, who was featured in a JuneFortune cover story, Yahoo CEO Marissa Mayer and the always irascible Mark Cuban.

3. Expect a reports round-up, too

It’s time once more for retail sales numbers – in this case for the month of August. The data will be available at 8:30am EST on Friday. Expect those numbers to be a mixed bag, with some stores reporting declines, but others getting a back-to-school lift. But retail sales and consumer spending overall have been suffering, according to Fortune. Other numbers to be released next week? The weekly jobless claims numbers on Thursday at 8:30am EST, while the NFIB’s small business survey comes out at 7:30am EST on Tuesday.

4. Prepare to read up on retail earnings galore

And speaking about retail, Barnes & Noble comes out with its earnings report on Tuesday before the market opens. It’ll be the bookseller’s first quarter results for the 2015 fiscal year. The book retailer is finishing up plans announced back in June to split its retail and Nook units into two public companies in a bid to bolster the e-reader business. That’s expected to be completed by March, according to The Wall Street Journal. Also important: Men’s Warehouse on Wednesday, and Lululemon Athletica on Thursday.

5. Food, glorious, food earnings

Retail aside, it’s a relatively tasty week for food earnings. Campbell Soup will announce its results on Monday before the market opens. Another earnings report to be served up: Krispy Kreme on Tuesday, after the close. The doughnut company made a mark last year for baking up a business turnaround. There’s also Darden Restaurants reporting of Friday in its first full quarter after selling off Red Lobster. And if you can’t get enough of your food biz news, check out Fortune’s round-up of “The Most Innovative Women in Food and Drink.”

And, exhale… Lululemon, founder reach truce – for now

The yogawear retailer has reached a truce with its founder, chairman and top shareholder Chip Wilson, who agreed to delay any proxy war against the company’s board until 2016 and to refrain from waging or supporting a hostile takeover of the business during that period.

Under terms of the agreement, announced on Thursday, Wilson will sell half of his 27.7% stake (40.2 million shares) to private equity firm Advent International for $845 million. Advent, which had invested in Lululemon early on, but later sold its stake, will add two of its senior managers, David Mussafer and Steve Collins, to Lululemon’s board. Mussafer will serve as co-chairman with current chairman Michael Casey. Lululemon also agreed to a review of its corporate governance practices. (Like Wilson, Advent is barred from waging a proxy war or hostile M&A activity.)

The deal comes just a few weeks after Wilson slammed the Lululemon board, accusing it of being “heavily weighted towards short-term results at the expense of product, culture and brand and longer-term corporate goals.” Hours before the annual shareholder meeting in June, he said he had voted his shares against the re-election of Casey, and fellow board member RoAnn Costin, president of Boston-based private-equity firm Wilderness Point Investments.

The truce avoids would could have been an ugly, distracting conflict at a time Lululemon, a maker of yoga clothing, is struggling to regain its footing from a debacle last year when it was forced to recall some of its popular pants after customers complained about the material being so thin that it was see-through. That issue ultimately led former CEO Christine Day to step down. In June, the Canadian retailer lowered its sales and profit forecasts. Lululemon shares LULU rose 6.2% in afterhours trading on Thursday on news that more zen was coming the company’s way.